The $5.3-trillion currency market is getting harder for traders to make money in as price changes that once took months or weeks now happen more quickly, says Hugh Killen, Westpac Banking’s head of trading for foreign exchange, fixed income and commodities.
Bloomberg News reports that liquidity is drying up because investors and banks are shying away from taking risk, and that makes for sharper, quicker currency turns, said Killen, whose career in financial markets spans 27 years and positions in Sydney, London and New York.
While volatility - which typically helps traders profit from price swings - has increased since 2014, turnover in October dropped to the lowest level in three years in the U.K., the main currency trading center. The reduced volumes came as a series of policy surprises rattled investors, from the lifting of the Swiss National Bank’s currency cap to China’s yuan devaluation and the Bank of Japan’s unexpected easing.
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